Published 4:00 am, Wednesday, July 27, 2005

2005-07-27 04:00:00 PDT Washington -- Congressional negotiators completed work Tuesday on a sweeping overhaul of energy policy that would provide billions of dollars in tax breaks to promote domestic production of oil, coal, natural gas and nuclear energy, as well as conservation efforts.

The bill would extend daylight-saving time, nearly double the amount of ethanol that must be added to the nation's gasoline supply, authorize a survey of offshore oil and gas resources, and give federal regulators final say over the location of liquefied natural gas terminals.

The measure, long sought by President Bush, is expected to pass the House and Senate later this week.

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Still, heated debate is likely on many of its elements, with critics finding fault with what's in the bill -- and what's not. They complain that it doesn't do enough to encourage conservation, gives tax breaks and subsidies to profitable oil and gas companies and includes measures that would roll back environmental protections to promote drilling.

Even some of the measure's supporters acknowledge that it may not significantly reduce U.S. dependence on foreign oil.

Bush has pushed for an energy bill since 2001, but the measure gained momentum this year after gasoline prices hit a record high. Its chances of passage improved earlier this week after House Republican leaders dropped a provision that would have shielded from lawsuits producers of MTBE, a gasoline additive that has contaminated water supplies in several states, including California.

The bill also sidesteps the issue of opening the Alaska National Wildlife Refuge to oil drilling -- another past sticking point. Sen. Pete Domenici, R- N.M., and chairman of the Energy and Natural Resources Committees, told the negotiators that such a provision would doom the bill in the Senate. But he assured them he intended to win that battle later this year in a budget measure that is not open to a filibuster.

The bill deals with just about every facet of energy, from promoting more production from traditional fossil fuels to exploring energy from new sources such as ocean waves.

The bill's supporters said the measure would, over the long term, help reduce the volatility of energy prices.

The bill also includes measures inspired by the 2000-01 electricity crisis in California and 2003 blackout in the Northeast.

Tom Kuhn, president of the Edison Electric Institute, a utility association, said the bill's completion came "at a time when U.S. electric companies from coast to coast are struggling to meet record demand for electricity in the midst of a punishing heat wave." He said its provisions would encourage new investment in electricity grids, in part by repealing a Depression-era law that has limited utility mergers.

The bill's total package of tax breaks was expected to be $11.5 billion - - higher than the $6.7 billion recommended by the Bush administration.

Among the most contentious provisions is the one that would give the Federal Energy Regulatory Commission final say over the location of liquefied natural gas terminals. It grows out of a dispute between California officials and federal regulators over how much authority the state should have in approval of a proposed terminal in Long Beach.

The White House-backed provision was opposed by governors from a number of states where the terminals have been proposed. The provision's supporters said it would prevent delays in building facilities needed to meet the economy's need for natural gas.

Another controversial provision -- the survey of offshore oil and gas resources -- drew opposition from a bipartisan group of coastal-state lawmakers. They warned that it could be a prelude to efforts to allow states to opt out of a long-standing moratorium on new drilling in most U.S. coastal waters.

One of the bill's major shortcomings, some critics say, is that it would not increase the fuel-efficiency standards for cars and trucks.

Rep. Edward Markey, D-Mass., complaining about the subsidies, noted that Bush had said that with oil prices so high, "energy companies do not need taxpayer-funded incentives to explore for oil and gas."

Industry officials and congressional sponsors of the assistance defended it as necessary to encourage drilling in high-risk areas.

"It's harder and harder to find energy," said Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee. "So if we're going deeper and deeper (in the Gulf of Mexico), where the technology is much more difficult, it's only fair to have some incentives to encourage that."

In a provision that perhaps will be most noticed by Americans, daylight- saving time would be extended in 2007, beginning on the second Sunday in March and lasting until the first Sunday in November, in an effort to save electricity.